TL;DR Summary
A Part IX debt agreement is a serious credit event that stays on your file for 5–8 years. Most specialist lenders require the agreement to be completed before they'll consider a home loan. Post-completion, expect 1–2 years of clean credit before approval, plus a 20% deposit in most cases. The right broker can match you with lenders who understand your situation.
What Is a Part IX Debt Agreement?
A Part IX (Part 9) Debt Agreement is a legally binding arrangement made between a debtor and their creditors under the Bankruptcy Act 1966. It allows people who cannot pay their debts to propose a reduced or restructured repayment arrangement — often a lump sum or instalments over time — without going through full bankruptcy.
While it avoids the more severe consequences of bankruptcy (such as a trustee taking control of your assets), a Part IX agreement is still a serious credit event. It is recorded on the National Personal Insolvency Index (NPII) and appears on your credit file, affecting your ability to borrow — including for a home loan. For context on the more severe scenario, read our guide on home loan after bankruptcy.
How Long Does It Stay on Your Record?
A Part IX debt agreement affects your record in two key ways:
- National Personal Insolvency Index (NPII) — your debt agreement is listed on this public register permanently. Unlike bankruptcy, it does not automatically come off the NPII once completed.
- Credit file listing — the debt agreement appears for 5 years from when it started, or 2 years after the agreement is completed (paid out) — whichever period is longer.
In practice, most Part IX agreements run for 3–5 years. This means you should expect the credit file listing to remain for 5–8 years total from the start of the agreement. A completed agreement that started in 2021 and was paid off in 2024 would remain on your credit file until approximately 2026–2029.
NPII Is Permanent
Unlike your credit file, the NPII listing for a Part IX debt agreement does not expire after 5 years. It remains permanently. While lenders primarily check your credit file (not the NPII), some lenders do check the NPII as part of their assessment — particularly for loans above $1 million.
When Can You Apply for a Home Loan?
The key question — and the answer depends on whether your agreement is active or completed:
| Situation | Realistic Outcome | Notes |
|---|---|---|
| Active debt agreement | Very unlikely — most lenders decline | 30%+ deposit required in rare cases |
| Completed — less than 1 year ago | Possible with strong application | 20%+ deposit, clean credit since completion |
| Completed — 1–2 years ago | Good specialist lender options | 15–20% deposit, clean post-completion record |
The critical milestone is completion. Once the agreement is fully paid out, you move from "active insolvency" to "historical credit event" in the eyes of specialist lenders. Working with second chance home lenders who specialise in this area gives you the best chance of success.
Free Debt Agreement Assessment
What do lenders look for after a debt agreement?
Get a free personalised assessment to understand your home loan options after a Part IX debt agreement. No credit check required.
What Lenders Look For Post-Debt Agreement
Specialist non-bank lenders evaluate post-debt agreement applicants holistically. Here's what they assess:
- Agreement fully completed — the debt agreement must be paid out in full. Active agreements are almost always declined.
- Clean credit post-completion — no new defaults, missed payments, or credit stress since the agreement ended. Even one missed payment post-completion can derail an application.
- Stable employment income — ideally 6–12 months in the same role. If self-employed, see our dedicated guide on credit repair before home loan applications.
- Genuine savings of 20%+ — most specialist lenders require a 20% deposit and expect to see at least 5% of the purchase price held in genuine savings for 3+ months.
- Explanation letter — a written account of what caused the debt agreement (illness, job loss, divorce, business failure) and what has changed since. Lenders want to see the event was situational, not a pattern.
- Low existing debt — minimal credit card balances, personal loans, or BNPL obligations. High existing debt reduces borrowing capacity and increases lender concern.
The Rate Premium
Expect interest rates 1–2.5% above standard rates with specialist lenders. This is the "risk premium" for your credit history. The plan should be to refinance to a standard lender within 2–4 years as your credit file improves. Use our borrowing power assessment to understand your capacity at current rates.
Frequently Asked Questions
No. A Part IX debt agreement is a formal arrangement under the Bankruptcy Act 1966 but does not involve a trustee taking control of your assets. However, both are recorded on the NPII and both are treated as serious credit events by lenders. Bankruptcy is generally considered more severe by lenders.
5 years from the start of the agreement, or 2 years after the agreement completes — whichever is longer. For most agreements lasting 3–5 years, this means a total credit file impact of 5–8 years from when the agreement was entered.
It is very rare. Most specialist lenders require the agreement to be fully completed before considering any home loan application. Some may look at active agreements with a 30%+ deposit in exceptional circumstances, but this is uncommon. The best strategy is to complete the agreement first, then apply.
Most specialist lenders require 20% (80% LVR). Some will consider 15% with a strong overall application. LMI is generally not available to people with a debt agreement on their credit file, which is why a larger deposit is necessary.
Specialist non-bank lenders including Pepper Money, Liberty Financial, La Trobe Financial, and Resimac are the main options. These lenders do not deal with consumers directly — you must use an accredited specialist broker to access them. The Big 4 banks will not approve applications from people with a debt agreement on their credit file.
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